Proceedings in a recent UK High Court case have revealed that Italian firm Eni S.p.A. was aware that a US$1.1 billion payment made by it and Royal Dutch Shell plc would end up in an account controlled by Dan Etete, a former Petroleum Minister of Nigeria, who was convicted of money laundering in France in 2007. Court documents allege that an official from Eni met with Etete at Etete’s house in Lagos in December 2009, and that Etete may have had another three meetings with Eni officials in the following year, including one at the 5 Star Principe di Savoia Hotel in Milan.

“This scandal demonstrates precisely why we need the new transparency laws that are currently being discussed in the EU that would bring much-needed transparency to payments between oil companies and governments. Oil companies have been pushing for weaker rules that would obscure such payments and for exemptions from reporting in some countries. As the G8 have committed to addressing corruption, the Italian government must support a directive that is fit-for-purpose by making sure these payments are covered. They must also ensure that no countries are exempted,” said Simon Taylor, director of Global Witness.

The High Court case, Energy Venture Partners v Malabu Oil & Gas, has been brought by a Nigerian consultant who alleges he was not paid by Etete for his work in helping to arrange the US$1.1 billion deal for oil block OPL245 in 2011. OPL245 has been the subject of controversy ever since it was awarded to Malabu in 1998, not least because Etete awarded the block to Malabu while Petroleum Minister of Nigeria. Etete is widely believed to control Malabu, although he has denied being Malabu’s owner, maintaining in court that he was employed by the company as a consultant only after he left office.

Etete is also controversial because he was found guilty in France in 2007 of money laundering, a conviction that was upheld in 2009. During the recent UK High Court case, testimony was heard that Etete had accepted bribes and used aliases to hide his ownership of money which he then used to buy expensive properties in France. Despite the fact that Etete’s conviction was upheld, court documents allege that, after the Eni official met with Etete at his Lagos residence in December 2009, Claudio Descalzi, Eni’s Chief Operating Officer, had dinner with Etete and others at the Acanto Restaurant in the Principe di Savoia Hotel, Milan, in February 2010. Other meetings between Etete and Eni officials are alleged by Malabu to have taken place in April and November 2010.

Following more negotiations, in April 2011 Eni and Shell agreed to pay US$1.1 billion to the government of Nigeria which itself had an agreement to pay exactly the same amount to Malabu. Global Witness believes that this was structured primarily as a way of allowing Eni and Shell to claim that it had not been dealing with Etete. The High Court proceedings, however, reveal that in reality Eni and its partner Shell had been prepared to deal directly with Etete and had apparently met him face-to-face on several occasions.

Eni chose not to respond to Global Witness’ specific questions about alleged meetings between Eni officials and Etete but stated, “the transaction concerning the acquisition of the 245 Block has been conducted by Eni and Shell in full compliance with the laws.” It reiterated that Eni acquired the 245 Block “directly from the Government of Nigeria.” In Global Witness’ opinion, this is a disingenuous claim, because the deal to acquire OPL245 resulted in a huge payment that Eni knew was ultimately going to Etete’s company.

Eni added: “We believe that the Government of a sovereign country should not be mistrusted and that dealing with the Government directly and without the use of intermediaries ensures full transparency in that transaction.” Global Witness believes that Eni was aware that its arrangement with the Nigerian Government would result in a payment to Malabu, and also questions the role the Government played as an intermediary and facilitator for the payment.

Simon Taylor of Global Witness added: “Eni and Shell’s claim that they did not do a deal with Malabu fails to address the question of their knowledge of where the payment was ultimately going. They also fail to explain their apparently extensive direct dealings with Etete and Malabu, including an alleged meeting between a Malabu representative and Eni officials just five months before the deal was concluded in April 2011. Both companies appeared to enjoy rather lavish meals with Etete and ended up taking part in an arrangement that, in the absence of a better explanation, looks like an attempt to conceal their US$1.1 billion deal with Abacha’s money laundering convicted oil minister. Both companies should be laughed out of the building if they attempt to weaken the new EU Transparency Directive. All EU countries, including Italy, should support exemption-free transparency laws that would bring these kinds of payments into the open.”